As the State Council spokesperson, Yuan was invited by student protestors during the Tiananmen Square protests to a forum on April 29, 1989.[3]:35 The forum was also attended by vice-minister of the State Education Commission He Dongchang. Attended by 45 students from 16 Beijing universities and colleges, the forum lasted three hours.[3]:35 During the forum, Yuan denied that corruption was widespread within the Communist Party or that the press was censored.[3]:36–38[4]:60

Yuan gave the Chinese government's first response to the military crackdown on the Tiananmen Square protests.[2] Two days after the crackdown on June 4, 1989, Yuan described the protests as a "counterrevolutionary rebellion" incited by "thugs and hooligans".[5]:20 He stated less than 300 people had died, of which only 23 were students.[2] He also implied that at least half of those deaths were soldiers of the People's Liberation Army.[6]

In an interview with American journalist Tom Brokaw on June 17, Yuan clarified that while he did not claim that no casualties resulted from putting down the "counter-revolutionary rebellion",[7] nobody had died in Tiananmen Square when the People's Liberation Army cleared the square.[7] He said that student protestors had vacated Tiananmen Square after being requested to leave by the army before the dawn of June 4.[5]:20 According to Yuan, American television networks altered news footage to make it appear that murder took place.[5]:20